Wednesday, November 13, 2013

Mozambique holds rate steady, inflation in line with target

Mozambique's central bank maintained its benchmark standing facility rate at 8.25 percent, saying inflation remains in line with the bank's objectives although the international and domestic risks have risen and could upset the macroeconomic balance.
The Bank of Mozambique, which has cut its rate three times this year - most recently in October for total rate cuts of 125 basis points - also said it would intervene in money markets to ensure the monetary base does not exceed 45.893 billion meticais by the end of November, up from the target of 44.729 billion by end-October.
Mozambique's inflation rate was largely steady at 4.42 percent in October compared with September's 4.52 percent and has fluctuated between 4 percent and 5 percent since February.
In its inflation report released this week, the bank forecast inflation of 5 percent to 6 percent for the fourth quarter, in line with its inflation target for the year.
Citing recent data, the bank said business confidence improved in September following a deterioration in the previous two months, but overall the economic climate deteriorated in the third quarter due to a fall in the outlook for demand.
Mozambique's economy improved sharply in the second quarter, with Gross Domestic Product up by 6.2 percent from the first, for annual growth of 8.7 percent, up from a 4.3 percent rate in the first quarter.
Mozambique's net international reserves rose by US$ 62 million to $2.919 billion at the end of October, helped by the inflow of foreign aid, net purchases of $11 million by the central bank, remittance of income from mining worth $5 million. This was countered by payments to the state of $18.3 million and external debt service payments totaling $14.1 million.
Mozambique's currency, the medical, was quoted at 29.87 to the U.S. dollar on the last day of October, a depreciation of 0.03 percent for the month and a year-on-year fall of 4.11 percent.